Problem 1

$4M AP RECOVERY FOR AGRICULTURE COMPANY

This is based on the accounts payable recovery audit performed by Hudson Consulting Group, LLC.

CLIENT ISSUE

The client, a $10 billion publicly traded international corporation, completed several acquisitions in a three-year
period. As a result, the company was operating several different technology systems across the enterprise, and
multiple functions were decentralized. Their rapid growth also created a corresponding increase in the volume of
capital expenditures and production. During the post-acquisition integration process, they eliminated duplicate roles
and revised the assignment of duties in various departments, including accounts payable. When Hudson first met
with the company, it learned they had not previously executed an accounts payable recovery audit. They believed
their current software would catch duplicate payments. Certainly, their software caught many routine duplicate
payments – but not all of them. Hudson performed a free assessment of their accounts payable function.

HUDSON SOLUTION PHASE I: FREE ASSESSMENT

The assessment identified several risks. For example, their system integration process for the newly acquired
companies typically lasted six to eighteen months. During this transition, they had periods of overlap with duplicate
systems running and processing accounts payable invoices. Hudson determined the company had a high likelihood
of duplicate payments. In addition, many of their acquisitions did not consolidate the invoice processing into a shared
service center, so the company maintained multiple accounts payable sites. Further, both eliminated positions and
staff turnover resulted in a lack of training and unfamiliarity with specific contractual terms, creating an environment
conducive to duplicate payments and overpayments.

HUDSON SOLUTION

Hudson also identified significant issues with multiple vendor records such as wrong addresses, incorrect vendor
names (due to vendor mergers and acquisitions) and incorrect federal tax identification numbers. Based on the
findings of our free initial assessment, the company engaged Hudson to perform an accounts payable recovery audit

PHASE II: ACCOUNTS PAYABLE RECOVERY AUDIT

The engagement began with data analysis. Utilizing our proprietary methodology, Hudson performed an audit
combining all acquisition data with data from multiple accounts payable payment processing sites. Their data mining
software performs over 26 unique algorithms to produce better than average results. During the engagement, they
reported on recovery by type and location, and they made recommendations for improvements in both processes and
controls including short-term fixes and long-term monitoring procedures to mitigate future risks

RESULTS

Combining the expertise of their Recovery Consultants with powerful forensic data mining techniques, their audit
produced exceptional results for this client. To date, Hudson has identified and collected over $4.5 million in
recoveries, added directly to their client’s earnings, over a nine month period. Ultimately, this engagement allowed
senior leadership to seize an additional opportunity created by their aggressive growth strategy.

Problem 2

An internal auditor selects from the multitude of services payments a transaction that pays for cleaning rolls at the
company’s headquarters. The company that cleaned them offers a discount of 2% if the invoice is paid within 10
days, what has happened. In terms of quality, helped by another employee, the auditor concludes that the rolls have
been cleaned properly. By examining the document for providing the work, the purchase order, the reception
document and the invoice, the auditor considers that the transaction does not contain elements of fraud. By further
examining the actual contract, the auditor finds that there has been negotiated a discount of 10% compared to the
last minimum price published by the services provider. However, the invoice is issued for the full price.

This error of omitting to apply the discount was used in a repetitive manner, which shows that this is not a simple
mistake, but fraud.